View more on these topics

Clegg rejects thinktank analysis of ‘unfair Budget’

Deputy Prime Minister Nick Clegg has attacked the Institute of Fiscal Studies’ Budget analysis, claiming it fails to take into account other Government policy initiatives.

Clegg says the study ignored capital gains tax increases for higher-rate taxpayers and measured the Budget’s impact “solely on the basis of how much money people could be receiving from and giving to the state at a single moment”.

The IFS report said: “The tax and benefit changes announced in the emergency Budget are clearly regressive, hitting the poorest households more than those in the upper-middle of income distribution.”

But Clegg claims this distributional analysis only tells part of the story.

He says: “Imagine a workless couple living on £5,000 a year in benefits, currently categorised in the bottom decile. If we increase their benefits by £5 a week, they are £5 a week better off. In the language of the IFS, this counts as fairness. But imagine the Government helps that couple find work.

“The fact that this couple’s lives are better disappears from the statistics the very second that those improvements happen.”

IFS senior research economist for direct tax and welfare James Browne says the £825m raised annually by the rise in capital gains tax rates is “probably not enough to significantly alter our conclusions”.

He adds:” Clegg writes about fairness whereas what we have been talking about is progressivity, whether the richest or the poorest lose most as a percentage of income.”

Recommended

Importing inflation

Inflation was in the news last week. Not only did we have the official UK figures, which showed the rise in the cost of living easing but still well above target but the Bank of England’s monetary policy committee minutes were published. Once again, Andrew Sentance disagreed with the other members of the committee and […]

Tax-saving strategies for trustees

Jeremy Pearson, technical support manager at Canada Life, details some routes for trustees to consider in light of the increased rate of capital gains tax

10

Solving the loaded question

The issue of premium loading has flared up this summer and is dividing the industry. Current commission rates on protection are quite adequate. I have no problem negotiating on the basis of volume business, which I am sure lots of big networks do on a regular basis, but what I object to is when this […]

Ex-Axa Framlington boss Kyprianou joins Gartmore

Ex-Axa Framlington boss Robert Kyprianou has joined Gartmore as a non-executive director as Neptune and Martin Currie are rumoured to be eyeing a stake in the firm. Kyprianou was chief executive officer of Axa Framlington until his retirement in September last year. The Financial Times reports that Neptune and Martin Currie have expressed an interest […]

taxes

Out from the long grass? An IT and NI merger

Those with a long memory will recall that at the start of the last parliamentary term George Osborne announced his intention to merge income tax (IT) and national insurance (NI).  Headline grabbing as the initiative was, the reality of the complexities, challenges and costs of such a move resulted in this idea being kicked into the political long grass.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment